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The North American Class 8 truck market is witnessing a significant shift from the previous year’s surge in orders. According to the latest data from ACT Research, orders for Class 8 trucks in October experienced a notable decline of 24.9% compared to the same period last year. This drop, though steep, aligns with industry expectations given the context of the past two years marked by intense supply chain disruptions.
In October, Class 8 truck orders fell to 31,900 units from 42,500 units a year ago. This decrease is attributed partly to the extraordinary demand observed last year, following prolonged supply chain challenges. Despite the downturn, orders remain above average both nominally and seasonally, suggesting a robust underlying demand.
Kenny Vieth, president and senior analyst at ACT, noted the significant impact of seasonal adjustments on the current order numbers. October’s “real” orders, after seasonal adjustment, stand at 25,800 units, marking it as the third-best order month in the past year. This trend indicates a gradual rise in backlogs, expected to reach around 165,000 units.
Industry leaders view the current market situation as a ‘reset’ rather than a downturn. Magnus Koeck, VP at Volvo Trucks North America, interprets the drop as an anticipated market slowdown. Despite this, he anticipates a strong market in the coming year, with an estimate of around 270,000 trucks for the U.S. and Canada.
The market dynamics reveal a split in demand. While larger fleets continue to place solid orders, smaller operators are more cautious, partly due to economic uncertainties and rising interest rates. This cautious approach reflects a more thoughtful decision-making process influenced by various economic indicators.
Kyle Treadway, President of Kenworth Sales Co., emphasizes that comparing current order activities with the past couple of years, marked by supply shortages and allocation issues, may not provide a fair picture. He suggests that the current numbers should be viewed against more normalized levels, indicating a return to traditional market dynamics.
Chris Visser, Director of Specialty Vehicles at J.D. Power, points out that fleets are cycling out older, high-mileage equipment, a trend that was delayed during the pandemic. He also highlights that, despite the decline in spot market rates, contract rates remain strong, supporting confidence in new truck orders.
The Class 8 truck market is undergoing a period of adjustment, moving away from the anomalies of the past couple of years and towards a more traditional market behavior. While the decrease in orders may seem stark compared to the previous year, the industry remains optimistic about the future, driven by solid fundamentals and a steady renewal of fleet inventories.
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